For JBS CEO, the worst is over for Brazilian economy

Valor Internacional

For Wesley Batista, global CEO of meat giant JBS, after hitting rock bottom in the second quarter the Brazilian economy has begun to show — timid and slow — signs of a recovery that will gain strength from the coming months, and especially in 2017. In an interview with reporters at Paris's Salon International de l’alimentation, or SIAL, a leading trade fair, the man who commands the largest non-financial private company in Brazil said he was pleased with the direction of measures signaled by the Michel Temer government, focusing on fiscal, social security and labor areas.

"The government's agenda is correct. If you don’t lose the focus and [keep] in the way it’s going, we’re optimistic. If the Temer government achieves the reforms which are in the agenda to be made, it’ll be an extraordinary legacy," he said. According to Mr. Batista, President Temer probably will not see the results of the reforms during his term but the country will reap the fruit thereof.

Despite showing optimism, the JBS CEO admitted the reforms will face resistance. "Difficulties to make reforms have always existed anywhere in the world." However, he insisted on the need for changes. "Brazil cannot live, for example, with a labor instability like now. It’s impossible,” said Mr. Batista, citing disparities between Brazil and the US.

While in the American market JBS has a legal team of five employees and just over 30 lawsuits, in Brazil the company's legal staff totals about 100 people. "I won’t even [detail] the number of cases in the portfolio. There are thousands," he said.

While he believes that the labor reform is crucial for the company controlled by his family, the Batistas, the JBS CEO acknowledged that, in order of priorities, the fiscal and social security reforms are ahead. "You cannot do everything at once. That's a reality. " Still, he shows optimism.

In the timetable envisioned by Mr. Batista, the Temer government would complete the fiscal and social security reforms by the first half of 2017. In the second half of next year, it would be the turn for labor reform. "And there’s still 2018 left to do something of tax reform," he perked up, even when asked about the challenge of approving reforms in an election year.

Parallel to the agenda of reforms, Mr. Batista said he already sees signs of recovery in consumer confidence. "I think the fear of losing jobs is declining," he said. As a result, there is more predictability, including the resumption of financed purchases. In this sense, the president of JBS Foods — which includes the Seara operations —, Juanita Karoleski, also said on Monday in Paris that supermarkets seem more willing to expand inventory.

While suggesting that the reversal of expectations in the country is related to the change of government — especially because the administration of former President Dilma Rousseff reached an "unsustainable" point, due to the fragility of her base of support for passing the necessary reforms —, the entrepreneur assessed that the impeachment was "very bad" for the country. "Any process like this is bad for any country. No impeachment process is good. "

On the other hand, Mr. Batista said he had no opinion on the merits of the decision that removed Ms. Rousseff from office. "If I gave my opinion, I would be insensitive to one side and to the other."

During the interview, Mr. Batista also criticized the explicit support of the Federation of Industries of the State of São Paulo (Fiesp) to impeach Ms. Rousseff. "It's not something for a trade association. This is something for civic groups. " For Mr. Batista, trade associations must take a stance in the debate on economic reforms, but not in partisan disputes. "Many associations no longer represent the sector [...] A [trade] group is not meant to represent a political party,” he said.

Asked about the investments of BNDESPar, the investment arm of the Brazilian Development Bank (BNDES), in JBS, Mr. Batista was keen to move away from the label of a national champion chosen by the Workers’ Party (PT).

For Mr. Batista, criticism of the BNDES’s investment in JBS is unfounded. "Those who make the least effort and analyze and study will see that it’s a ridiculous urban legend," he said. In the beef industry, he argued, JBS was not the only company that received investments from the state bank. "The bank has invested in the four top companies of that time because it believed in the Brazilian competitiveness for protein production," he said.

Still on the BNDES, Mr. Batista said that JBS did not receive loans at subsidized interest offered by the bank. Investments were made with the purchase of shares. Today, BNDESPar owns 20.4% of the company's shares. "The bank made a deal with us. It bought it [the stake] with the intention to make money and a profit. It [BNDES] was not Santa Claus,” Mr. Batista says.

The businessman also commented on Operation Greenfield, in which he was brought to testify coercively about capital injections of pension funds Funcef and Petros into pulp producer Eldorado Celulose, controlled by J&F, the holding company of the Batista family that owns JBS and other assets, such as dairy group Vigor.

"The [pension] funds invested and have a beautiful result. It’s a business that is making a profit for the funds," he said, ensuring there are no irregularities in the investments in Eldorado. "There was nothing wrong. It’s an honest business, which generates wealth.” Mr. Batista admitted that the case, which led to his temporary removal from the command of JBS, was not pleasant. "On the other hand, when you have nothing to hide, it's fast. You go there and explain," he said.